Apple (AAPL) Stock: The Vision Pro In Hindsight

Person using Apple Vision goggles
Credit: Apple

Apple (AAPL) stock has been one of the better-performers among tech, rising 40% year to date, compared with the 12% rise in the S&P 500 index. The shares have returned 5% just in the past thirty days, pushing the tech giant close to the $3 trillion valuation.

But on the heels of the company’s first new product launch since the Apple Watch, the stock has didn't get the sort of reaction some investors expected. So is it time to take profits? Or can the stock, which recently netted a new 52-week high of $185, continue its gradual climb? It has been a week since the iPhone maker, at the company's Worldwide Developers Conference, finally lifted the curtains on its long-awaited mixed reality headset, dubbed Vision Pro.

I say “finally” because over the past several years, Apple’s interest in AR/VR has been one of the worst-kept secrets on Wall Street. Described as a "revolutionary spatial computer that seamlessly blends digital content with the physical world,” the Vision Pro employs a three-dimensional user interface that can be controlled by users' hand gestures, eye movements, or voice controls. The company says these collective features help to "blend the physical world with digital content.”

The company itself describes the Vision Pro as a device that "lets users interact with digital content in a way that feels like it is physically present in their space." In essence, the Vision Pro is being pitched as an entertainment platform. During last week's presentation at the WWDC, Walt Disney (DIS) CEO Bob Iger made a surprise cameo, announcing that the Vision Pro, when released next year, will come with Disney+ where users will be able to immerse themselves in movies and shows they are watching.

The device, which also works with FaceTime, help users get the sense that they are physically present with the person on the video call, though they are not. Vision Pro uses 23 million pixels across the two displays, featuring what it dubbed "EyeSight," which shows the users' eyes when others are around. When fully immersed in an experience, the users' eyes won't be visible, letting others know they can't be seen.

Broadly speaking, the Vision Pro is arguably already best-in-class among its category which includes Meta Platform’s (META) Meta Quest. Wall Street analysts were impressed, including Credit Suisse analyst Shannon Cross who said the device "solves many of the technical limitations.” Adding it is the "first un-compromised mixed reality solution.” Jefferies analyst Andrew Uerkwitz called the device the "most technologically advanced device we've seen.”

All of that said, Vision Pro also comes with a hefty price tag of $3,499, which compares to Meta's Quest 3, which goes for a retail price of $499. This brings up the question: who’s going to buy the Vision Pro at $3,499, especially since Apple didn't introduce any killer apps to come with it. It is likely that Apple, which is known to always play the long game, may take the year before launch to build up its app catalog.

Upon launch, bullish analyst estimates calls for Apple to generate Vision Pro revenue of just $5.2 billion in the first year. This assumes 1.5 million units sold. With Apple expected to generate $410 billion next year, $5.2 is a drop in the bucket. But as I’ve said, Apple’s long game strategy, which created the iPod and iPad markets, the Apple Watch, and certainly the iPhone, remains unknown. It is likely that in the next five to ten years, the market will look back at the launch of the Vision Pro and say that it was this device that ushered in the Metaverse.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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Richard Saintvilus

After having spent 20 years in the IT industry serving in various roles from system administration to network engineer, Richard Saintvilus became a finance writer, covering the investor's view on the premise that everyone deserves a level playing field. His background as an engineer with strong analytical skills helps him provide actionable insights to investors. Saintvilus is a Warren Buffett disciple who bases his investment decisions on the quality of a company's management, its growth prospects, return on equity and other metrics, including price-to-earnings ratios. He employs conservative strategies to increase capital, while keeping a watchful eye on macro-economic events to mitigate downside risk. Saintvilus' work has been featured on CNBC, Yahoo! Finance, MSN Money, Forbes, Motley Fool and numerous other outlets. You can follow him on Twitter at @Richard_STv.

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